Manufacturing new orders declined by 2.9% y/y in December, after increasing by 16.4% y/y (revised from 17.0% y/y) in November, data of the stat office showed on Thursday. Production of capital goods declined by 9.2% y/y, which reflects some slowing down of GCF growth, in our view. The growth of intermediate goods orders decelerated tangibly to 2.6% y/y. On the other hand, the increase of orders for consumer goods quickened to 9.3% y/y, likely supported by expectations about an uptick in household consumption due to the cut of the personal income tax burden on low earners. In the meantime, industrial sales growth moderated further to 2.5% y/y, implying increase of inventories given that industrial production growth picked up to 7.1% y/y in December. The increase of manufacturing sales decelerated to 3.6% y/y, suggesting that the expansion of exports slowed down. Meanwhile, the decline of utility sales deepened, while mining sales growth turned back to negative territory, in spite of the higher energy prices.
Overall, we believe that the recent increase of inventories will result in slowdown of industrial production growth. Still, it should continue to report increase in the months ahead, supported by rising external and domestic demand. Moreover, the higher energy prices should result in further rise of oil shale mining, which was previously reduced.